Capital controls could be lifted by year-end

CYPRUS could lift all capital controls by the end of this year if it makes sufficient progress adopting an international bailout programme and confidence is fully restored to the economy, its central bank governor said on Friday.

Citing a roadmap for the gradual relaxation of capital controls, Panicos Demetriades said the full easing would require “substantive progress” in implementation of its economic adjustment programme.

“That is expected to happen, if all goes well, by the end of the year,” he told journalists.

Cyprus introduced capital controls last March to prevent a run on its banks after a bailout shut down a major lender, and imposed losses on large deposits in a second. It was conditional for 10 billion euros in aid from the EU and the International Monetary Fund.

Based on the plan for a gradual relaxation on transactions, domestic controls will be fully eased first, before transactions involving money transfers abroad are scrapped.

There has been an incremental easing of restrictions, but cash withdrawals are still limited to 300 euros per day, cashing of cheques is not allowed, savers cannot break time deposits and large cash transfers have to be vetted.

Demetriades said he anticipated another round of easing on domestic transactions in coming weeks.

“I believe we will be able in the next few weeks to engage in the next set of relaxations which will essentially remove nearly, if not all, domestic restrictions,” he said.